Friday, Jul 28, 2006
more pressure for the BoE
Guardian: Bank under pressure to increase interest rates
\"...approvals for house purchases in June - a rise of almost 22%...\"\r\n\r\nblimey.
If they don't raise rates this month, my prediction is that they will next month. No later.
Posted by inbreda @ 09:12 AM (172 views) Add Comment
11 Comments
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1. denzil said...
A rise of 22% on June 2005. 2005 saw the lowest volume of sales for 30 years so I'm not convinced this is too high a figure and thus I believe rates won't rise in August on the back of 22% rise in mortgages.
Uncle Tom certainly has his work cut out keeping his accuracy of rate calls for August.
2. uncle tom said...
..very true, but as I posted yesterday, I'm in the No Change camp (but with fingers crossed!)
3. George Monsoon said...
I agree with Uncle Tom,
but I can see the next rise (probably around September / October) having no effect because its too little too late, and then the BoE will need to push the rates up again the following month. That could spell disaster for the retail market over Christmas.
I am trying to be objective but my hopes are that they stop boiling the frog because its cooked to the bone!
4. The Capitalist said...
Radio 4 Today reported terrible crop production throughout EC due to drought (in some cases 40% down) which will mean higher prices for groceries.
5. P. O. O. R said...
I am currently not a home owner, however if I was I would seriously be thinking at the moment of changing my mortgage from a variable to a fixed rate - I wonder if this is what many people are doing which could account for such a large increase in Mortgage applications. I am expecting that August will see a few votes in favour of a rise, however it won't be until October / November until the majority vote in favour. It will be intersting to see how many changes are made in the next 18 months, and how high interest rates will reach. It wouldn't surprise me if in 18 months IR are over 6 percent.
6. Surfgatinho said...
People seem to keep forgetting the BOE's mandate is to contorl inflation. They (wrongly IMO) firmly beleive current inflation is a spike so will not raise rates until proved otherwise.
Also from the article:
"Although it sees no good reason for the Bank to delay, it said there would be little damage if the MPC did not raise rates until later this year."
Just wondering though - Does erring on the side of caution (in terms of economic stability) mean raising or lowering rates?
7. paul said...
The reason I'm _not_ in the no change camp is because I didn't realize the number of people who share the opinion that inflation is much higher than either the CPI and RPI - there are a lot. When inflationary pressure builds, wage demands increase (I know that Network Rail have agreed to strike because their pay demands are not being met, and Royal Mail is asking for above inflation rises).
The MPC will be accused of being "out of touch" if they don't raise rates. And quite rightly so.
At the end of the day, there's only so much mileage you can gain from cooking the figures, and the MPC will know that the rising tide of scepticism over published inflation figures will force their hand.
Of course a 0.25% rise is nothing - only this time it's all the difference with the massive amounts of debt in the UK, and I think that even a modest rise could hammer house price expectations. UK plc has overstretched its credit limit, and even the tiniest lever like a 0.25% rise will affect tens of thousands of people. This, of course is also a reason not to raise rates, but the MPC have the stark choice of market credibility vs. debtowner popularity, and they can't have both.
Still think there will be a rise - oooh this will be interesting!!
8. tyrellcorporation said...
You never know, they might just sneak past with a majority of one for a rise...
0.25% rise is very little and yet a great deal when the pips are already squeeking!!!
9. Dadm1975 said...
No change......I'm willing to bet money on it.
10. Time To Raise Petrol Prices said...
Time to get my account ready to put a fat spreadbet on Sterling the instant the news comes out!
11. Retiredbanker said...
But don't forget that a lot of people have "locked" themselves into fixed-rate mortgages, sometimes for many
years ahead.